FDD Talk: What You Need to Know About the Painting with a Twist Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Painting with a Twist franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Painting with a Twist franchise, based on Item 7 of the company’s 2017 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Painting with a Twist franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of Painting with a Twist’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2016 average, median, high, and low gross revenue for the top third, middle third, bottom third, multi-unit, and all 158 Painting with a Twist franchisees that (i) were open during the entire Measurement Period; (ii) met their required minimum local advertising spend; (iii) provided the franchisor with the required profit and loss information containing the data to be included in Item 19; (iv) were not in default of, or non-compliant with, their Franchise Agreement as of December 31, 2016; and (v) did not transfer ownership of the Studio during the Measurement Period

• 2016 average artist pay, operating supplies, annual advertising, charitable contribution, and rent for the 158 Painting with a Twist franchisees in the sample

Section I – Background Information

13 Things You Need to Know About the Painting with a Twist Franchise

Debuts Innovative Screen Art Developed by Company Artist and Instructor

1.  At the beginning of February 2018, Painting with a Twist introduced a new and unique way for customers to create customized screen artwork that is weather resistant and eco-friendly. The new art program, called Rebeca Flott Arts Screen Art, is now available exclusively at participating Painting with a Twist studios. The technique uses framed window screens to display painted artwork.

2.  Led by a local artist, customers use artist mud to fill in sections of the screen and then paint. The artist mud creates texture on the painting and the screen material provides a versatile and unique way to display art. The class is priced at $45 and customers can choose from more than 40 original Rebeca Flott paintings available in the Painting with a Twist library.

3.  Painting with a Twist co-founder Cathy Deano said, “We’re beyond excited to provide our guests with an entirely new way to express themselves through art. We are constantly striving to enhance our guest experience and Rebeca Flott Arts Screen Art Exclusively at Painting with a Twist does just that. Everyone who attends a class will be able to create their own unique masterpiece they can display inside or out.”

4.  Flott’s screen art came to the attention of Painting with a Twist after her handmade screen art went viral on Facebook. The company reached out to Flott and has now inked a licensing agreement with her to bring the screen art painting to its 350 studios. Flott has been a Painting with a Twist artist and instructor in Colorado Springs for the past five years. She has plans to open her own Painting with a Twist studio in Aurora, Colorado sometime this year.

Teams Up with NFL Players Association for Second Annual Super Bowl Event

5.  For the second year in a row, Painting with a Twist partnered with the NFL Players Association’s Professional Athletes Foundation to produce the community event “Smock and Jocks: Painting with the Pros.” Through this partnership, Painting with a Twist and the NFLPA hosted a two-hour event on Friday, February 2, from 9:30 to 11:30 a.m. at Roseville Area High School in Minnesota.

6.  Painting with a Twist led an hour-long instructional painting class with more than 10 former NFL players, including Super Bowl-winning defensive back Duane Starks and All-Pro Washington Redskins kicker Chip Lohmiller, as well as dozens of local students. All participants individually painted football-themed artwork on bare 16” by 20” canvases.

7.  Andre Collins, executive director of the NFLPA’s Professional Athletes Foundation, said, “Last year’s event in Houston was so well received that we decided to partner with Painting with a Twist again. Painting with a Twist is a respected organization devoted to charitable campaigns and their efforts to aid and educate local community organizations aligns perfectly with ours. We hope to continue our partnership for many years to come.”

Plans for Significant Expansion in California

8.  At the end of June 2017, Painting with a Twist announced its plans to add five more studios in California by the end of 2017. This is the brand’s most significant expansion in the state since signing its first California franchise in 2013. The company signed single-unit franchise agreements to bring studios to Costa Mesa, Lakewood, Los Angeles, San Diego, and Thousand Oaks, which were all set to open by the end of the year.

9.  The growth in California reflects the brand’s expansion in new markets throughout the country. In the same announcement, Painting with a Twist said that it was also opening its very first studios in Wisconsin, New Mexico, and Arizona.

10.  Michael Powers, managing director of Painting with a Twist, said, “We have finally arrived on the West Coast in more numbers and franchise interest now is the highest that we have received from the Golden State in our franchising history. Our recent appearance on ‘Undercover Boss’ catapulted our brand popularity in areas where we haven’t had much of a presence in the past and we’re now excited to show Californians why we are ranked the No. 1 paint-and-sip studio in the country for the past four years in a row.”

Company History

11.  Painting with a Twist was founded in 2007 by Cathy Deano and Renee Maloney in Mandeville, Louisiana. They wanted to bring business and fun back to their community after it was ravaged by Hurricane Katrina. Deano and Maloney initially called the business Corks N Canvas and the first class was taught in Deano’s barn. The first official Corks N Canvas location opened later in 2007 and by 2009 the business had grown to four studios in the New Orleans area.

12.  Deano and Maloney started franchising the concept under the new name, Painting with a Twist. The first franchise location opened in Lafayette, Louisiana. By the end of their first year of franchising, Deano and Maloney had opened 24 new Painting with a Twist studios. In less than a decade, the company has grown to over 350 locations across 39 states.

Entrepreneur’s Franchise 500

13.  Painting with a Twist has appeared on Entrepreneur’s annual Franchise 500 list every year since 2014. The brand’s highest rank was No. 168 in 2018, while its lowest rank was No. 276 in 2014.

Section II – Estimated Costs

• Please click here for detailed estimates of Painting with a Twist franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Painting with a Twist’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

• This Item sets forth certain historical data submitted by Painting with a Twist franchisees, including average and median annual gross revenue and certain average expenses, for Painting with a Twist Studios during the period from January 1, 2016 to December 31, 2016 (the “Measurement Period”).

• As of the end of the Measurement Period, there were 261 Painting with a Twist franchises. This Item sets forth historical data for 158 Painting with a Twist franchisees (the “Reporting Franchisees”). 103 Painting with a Twist franchisees were excluded from the calculations because the franchisees:  (i) were not open during the entire Measurement Period; (ii) did not meet their required minimum local advertising spend; (iii) did not provide the franchisor with the required profit and loss information containing the data to be included in Item 19; (iv) were in default of, or non-compliant with, their Franchise Agreement as of December 31, 2016; or (v) transferred ownership of the Studio during the Measurement Period.

• Painting with a Twist has not audited nor independently verified this information.

Part 1 – Average and Median Annual Gross Revenue (for the Period from January 1, 2016 to December 31, 2016)

• The chart below presents the Average Annual Gross Revenue and Median Annual Gross Revenue for all Reporting Franchisees during the Measurement Period.

• “Gross Revenue” for purposes of this Item 19 is defined as the total of all sales invoices or other items or services billed to the customer for all “completed sales” less any discounts during the Measurement Period. Sales are considered “completed sales” when the franchisee collects final payment from the customer or by the date that is one month after final receipt of all products and/or services sold to the customer, whichever is earlier.

• Importantly, Gross Sales does not include any revenue derived from alcohol or retail sales made during art classes, and Painting with a Twist does not currently charge a royalty in connection with any revenue derived from alcohol sales.

• “Median” means that 1/2 of the Reporting Franchisees achieved Annual Gross Revenue that exceeded the Median Annual Gross Revenue, and 1/2 had Annual Gross Revenue below the number presented.

All (158 Painting with a Twist Franchisees)